Michael.1
Insolvency and related law and policy, and more

Michael Murray is an Australian author and commentator on corporate and personal insolvency law and related issues, in Australia and internationally. He has a strong law and policy background, is independent of any connections, and his views are his own. He gives no legal advice. 

Electronic delivery of documents in insolvency law

Some belated concern has been raised about the potential for new corporate insolvency law allowing a winding up demand to be served on a company by email, thereby creating the groundwork for a winding up order against the company. [1]   See Mark Wellard’s article in the Insolvency Law Journal.  

‘Belated’ because email service of bankruptcy notices (and other documents) has been available since 1996 in personal insolvency, and that can lead to a person’s bankruptcy.[2]

(As is often the case, corporate insolvency law lags personal and takes a while to catch up).

But the benefits of that approach in personal insolvency have been clouded by some opaque 2021 legislative re-drafting, and now complicated by the corporate insolvency changes about which the belated concern has been raised.

Reg 16

Former Bankruptcy Regulation 16 allowed service of documents by a range of means, including, by “electronic mail”:[3] see Fuller JR, in the matter of Alford v Alford [2017] FCA 782 and The Law of Bankruptcy Notices and Creditors’ Petitions, Nicholas J Simpson, 2020, LexisNexis, Chapter 2. 

However new Bankruptcy Regulations 2021 were drafted commencing April 2021. Section 102 in effect replaced regulation 16.

Section 102 Service of documents and its explanatory statement

It provides:

(1) Unless the contrary intention appears, if a document is required or permitted by the Act or this instrument to be given or sent to, or served on, a person (other than the Inspector-General, the Official Receiver or the Official Trustee), the document may be: (a) sent by a courier service to the person at the address of the person last known to the person serving the document; or (b) left, in an envelope or similar packaging marked with the person’s name and any relevant document exchange number, at a document exchange where the person maintains a document exchange facility.

Note: See also section 28A of the Acts Interpretation Act 1901.

(2) …

According to the Explanatory Statement, s 102 allows “personal service, service by post and service by electronic communication”.

That is not apparent to me from the meagre words of s 102 – and from the “by the way, see also …” approach – but then legislative drafting is not my area.

Instead, I relay this comment I received from a lawyer more skilled than me about s 102, that

“the new regulation in essence requires the reader to trace through one regulation and two Acts of Parliament to then form a view whether there are any provisions for service under the Electronic Transactions Act [ETA]. The ETA does not use terms such as served or service, but rather despatch and receipt. Perry J in Fuller JR, in the matter of Alford v Alford [2017] FCA 782 ([74] – [76]) considered section 14B of the ETA and found that it could be used as a vehicle to serve a bankruptcy notice under the ETA, however that may have been arguably clearer given the wording of the old regulation 16.01(1)(e)(i).  If the regulation is to bear the intention as referred to in the Explanatory Statement (at p. 45), they should add words like the old regulation 16.01(1)(e)(i) to make the point of electronic service pellucidly clear”.

Corporate insolvency

But assuming this were all satisfactory, as it may be, we then have what should be harmonised provisions for service by email in corporate insolvency law. But these took a different approach, as well explained by Wellard, by amending s 600G Corporations Act, and also by amending Schedule 2, making it inconsistent with the ‘harmonised’ Schedule 2 in bankruptcy.

I have asked both the Attorney-General’s Department and the Office of Parliamentary Counsel why there are separate approaches to the drafting of electronic service provisions used constantly in insolvency practice. When any thoughtful reply arrives, I will report it.

See my earlier comments at Service of insolvency documents by email | Murrays Legal Commentary

Electronic communications

More broadly, laws concerning communicating electronically are, I would have thought, a whole of government issue that should allow for one set of provisions authorising this, and consequent issues like date of service/delivery.  That is not the case here.  Nor in Treasury’s recent Modernising Business Communications, confined as it is to the public sector’s categorisation of ‘Treasury’s portfolio’: ‘Modernising’ insolvency communications | Murrays Legal Commentary

Australia’s government, its departments don’t seem to have any such whole of government approach; and it seems that our laws are drafted according to the instructions from individual clients and the limited perspectives of each of them.

Forget it ….

I could write and do more, and will, but do bear in mind what wise counsel told me, “Forget it, Mike, it’s Canberra”.

 

================================

[1] “Electronic communication” – amendments to the Corporations Act: implications for service of statutory demands, Mark Wellard, (2021) 29 Insolv LJ 45.

[2] Re Silvas [1997] FCA 206

[3] Unless the contrary intention appears, where a document is required or permitted by the Act or these Regulations to be given or sent to, or served on, a person (other than a person mentioned in regulation 16.02), the document may be:

(a)  sent by post, or by a courier service, to the person at his or her last-known address; or

(b)  left, in an envelope or similar packaging marked with the person’s name and any relevant document exchange number, at a document exchange where the person maintains a document exchange facility; or

(c)  left, in an envelope or similar packaging marked with the person’s name, at the last-known address of the person; or

(d)  personally delivered to the person; or

(e)  sent by facsimile transmission or another mode of electronic transmission: (i)    to a facility maintained by the person for receipt of electronically transmitted documents; or (ii)   in such a manner (for example, by electronic mail) that the document should, in the ordinary course of events, be received by the person. …

 

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